Publicom will not see the light of day. The $35 bn merger of ad agencies Publicis and Omnicom has been cancelled. The idea that bigger is better in the advertising business seems to me to have been misguided from the start. Ads have to be creative, original, and compelling. They have to respond not just to the language of the target buyer but also to his or her culture. So a single campaign for a top product still has to be hand-tailored for each market. There is therefore no edge except when signing up lazy advertisers from being big and global in the ad business.

Another investor rebellion occurred in Britain today by Standard & Chartered Bank stockholders. They voted 40% against the bank's higher pay structure. If enough investors vote down these pay boosts, companies will lose their argument that executives will walk away because they could get more money elsewhere.

The next step would be to challenge the assumption by tax-writing legislatures (US Congress among them) that high tax rates discourage job-creating entrepreneurs from doing their thing. Given that higher pay levels are coming in a period when hiring is more or less flat, the argument looks invalid. Moreover, the best paid Americans are the ones running hedge funds. Highest salaries are not being paid to the brass at US companies making things or selling non-financial services. More on a hedge fund operator for paid subscribers below.

Not only did Spain's Telefonica (TEF sold) report rotten earnings; it also pulled down European markets today which fed through to Wall St. Wall Street's mood is ugly today. So is mine. That is why I am sprouting egalitarianism.

More follows from Canada, Britain, China, Brazil, Russia, Korea, Finland, South Africa, Colombia, plus two items from South Korea.

*A tax paying hedge fund not overpaying its staff exists--in Canada. Our recently purchased C.I Financial (CIFAF) reported a brilliant Q1 but the stock isn't moving in the US, having fallen with the loony. However, in a rare show of enthusiasm in Canada, target prices are being raised and results applauded up in Toronto for what they call CIX. We bought it as a takeover target for Bank of Nova Scotia but it is doing very well as a stand-alone stock. We beat the rush on Bay Street by tipping the stock before it reported.

CIFAF Q1 earnings attributable to shareholders rose 23% y/y to C$121.7 mn or 43 loony cents/sh on revenues at the asset management company rising 17% to C$445.6 mn. CIFAF boosted its divvie by 5% to boot to loony cents 28.5 making the yield 3.3%.

The main reason for the boomlet is that assets under management grew by 20% y/y to C$96.5 bn along with another $28.2 bn of assets under administration (up only 16%.) The total, gross sales of CIF funds hit a new record of C$4.41 bn vs 3.8 bn a year earlier. Earnings before interest, taxes, depreciation and amortization hit C$211.2 bn at the close of Q1, or 75 loony cents/sh vs prior year $181.4 bn or 64 cents/sh, a nice rate of growth.

The rise reflects cautious Canadian babyboom retirement planning. Other metrics were also impressive: cashflow up 17% overall and per share; return on equity a whopping 25.1%up 260 basis points from a year ago. Moreover, costs of managing all those loonies didn't rise as fast, up only 17% because of economies of scale, to C$394.4 mn. The report also included April figures showing that assets under management grew some more, to C$97.3 bn as of May 1, another record, as sales kept growing.

CIFAF operates mutual funds, segregated and hedge funds, master ltd partnerships, separately managed accounts, structured products, pooled assets, and assets under administration. Unlike some managers of money south of the border, it pays taxes, at a rate of 26.7% in Q1.

CI is part owned by BNS. Its investment product brands are CI Investment,Stonegate Private Counsel, Assante Wealth Mgm, Marret Asset Mgm. (fixed income funds), Cambridge Asst Mgm, Black Creek Inv Mgm (in Britain), Harbour Advisors,Tetrem Capl Mgm, Altrinsic Global Advisors, QV Investors, Picton Mahoney, Lawrence Park Asset Mgm., United Financial, Signature Global Asset Mgm., Red Sky Capl Mgm, Synergy Funds, etc etc. US retail investors may not buy into these. In the US they run Epoch Investment Partners, value players, under William Priest, with $12 bn in assets. They grew with acquisitions of good management firms over the course of decades and left the stars in place and, being Canadian, didn't overpay them.

*Naibu is up to 78 British pence today ahead of Camkids (at 73.55 pence) which reported good numbers yesterday. The London Alternative Investment Market (AIM) is where NBU and CAMK trade. Here is why NBU is up, an article from the Investor's Chronicle daily blog:
    “In the 16 years Simon Thompson has been a financial journalist he has never come across a highly profitable and debt free company trading below the value of its cash pile. However, that’s exactly the tantalising investment opportunity offered by the shares of an Aim-traded maker and supplier of branded sportswear and shoes. Not only is the company’s market capitalisation of £41m well below net funds of £44.6m, but this is a company that has just reported post tax profits of £29.3m. This means the company is being valued on just 1.3 times net profits with the cash pile thrown in for free! In Simon’s book, the shares are a compelling buy.

“The investment opportunity [is] offered by Aim-traded Naibu Global International (NBU: 72p), a Chinese maker and supplier of branded sportswear and shoes. Offering a branded range of 556 items through 3,188 stores that are operated by 25 distributors in the second, third and fourth tier cities in China, Naibu primarily targets the disposable income of young consumers aged between 12 and 35.”

It appears that this kind of stock boosterism is legal in the Mother Country. It reminds me of the days when I used to invest in Vancouver.

The stock-touting IC belongs to The Financial Times which failed to deliver my newspaper this morning.

*An exception to the black mood of the markets is Naspers, subject of a writeup in the NY Times today with the headling “Red-Hot Web in China”. The article tells how capital-hungry Chinese web start-ups like Tencent and Alibaba had to seek out foreign investors using offshore incorporated vaiable interest entities when Chinese financing could not be found. This led NPSNY to buy a stake in TCTZF back in 2001 from private investors at the peak of the dot-com boost. The S. African firm paid $80 mn and agreed to keep adding money as founder Pony Ma was given his lead in Naspers' first major foreign play. Naspers, a former Afrikaans newspaper publisher, now owns 38% of Tencent which did an IPO in 2004 after which Naspers added Internet and cellphone companies to its holdings in Russia, Brazil, and Africa. Despite the grey cloud over stocks, Tencent is also up, more moderately.

*Vale is still a fave of J.P. Morgan analysts despite the plummeting iron ore price and a lower target for the Brazilian iron ore giant. It lowered its VALE TP to $19 from $22.5 but added that there is “no cause for concern for [the] investment case, as prices do not appear to follow the spot price trend over multiple quarters, removing Q/Q volatility.”

Vale production costs for its iron ore pellets are ~$50 per tonne still giving it a price edge against costlier Australian iron ore as ore prices hover barely into three digits (at under $104/tonne now). Shipping costs for getting the ore to China and India (big markets) can be cut by sailing the Valemax carriers more slowly, adding to the edge against Oz ores.

I like Vale for its edge; because it is getting rid of a hefty and unfair Brazilian tax bill thanks to a Supreme Court ruling citing Brazilian double taxation treaties; and because its nickel sales may make up for some of the pressure on iron. I also think Dilma Rousseff is not a shoo-in and there may be a more business-friendly mood in Brasilia. Meanwhile Vale is building out its infrastructure for bringing new mine production to market in future years.

And Vale is playing hardball for a stake in the largest iron ore mine not yet in production, in Guinea, against Rio Tinto. Both companies are happy to keep the ore from Simandou off the market for a few more years given the glut. Another suit in international courts is being undertaken by Israeli-Swiss biznesman Beny Steinmetz who won the RIO concession from a former Conakry adminstration, allegedly by a payment to the then president's 4^th wife. Vale bought half the BSG Resources stake and claims it had no knowledge of how Steinmetz won it. RIO is trying to get its original concession restored. This will run and run.

*Agrium is selling its Turf and Ornamental business for $85 mn to Koch Agronomic Services, a part of Koch Fertilizer as part of AGU's strategic review. The deal will close in the current quarter. AGU was retained as a speculative out perform by CIBC with a C$112 target price despite its last quarterly missing EPS forecast by a penny, at 7 cents and warnings about Q2. However CIBC did cut its Q2 EPS forecast to $4.19 from $5.15 because of outages at Corseland, Joffre, and Redwater and higher operating costs at other plants. Its full year and 2015 earnings forecasts were also cut, but I cannot make sense of the numbers in the CIBC release. The stock fell over 2.5% in Toronto yesterday to C$100.55, 8% below its loony-denominated 52-wk high.

*Nokia and NTT Docomo of Japan will work together researching 5G radio access experimental mobile telecommunication tech, whatever that may be.

*Ecopetrol's BBB rating was confirmed by Standard & Poor's after all. That means it can raise money without paying higher interest rates and the stock is up 1.25%.

*Neige d'antan note. If GE gains control of Alstom (whose TGV rail systems business it covets) it will have to spin-off Alstom's wind turbine lines to state-controlled Areva SA, ARVCF, a political football we used to own which is diversifying into wind.

Fund notes follow:

*Aberdeen Global Income Fund (FCO) this month will pay 7 cents dividend (unchanged) of which 83% will be from net investment income and 17% return of capital.

*Aberdeen Asia Pacific Income Fund (FAX) will pay a 3.5 cent dividend (unchanged) of which 61% will be from net investment income and 39% return of capital.

Return of capital is not taxed. I am trying to get a closed-end fund expert to tell us why the ROC payment of shareholders own money back is a good thing; I am not sure myself.

*The Korea Fund published a quarterly update which was impossible to find without help from Allianz (the manager of KF). As of Mar. 31 its investment portfolio was 39% in consumer discretionary; 32% in information tech; 11% in financials; 9% in industrials; and 8% in materials. By size its largest holdings were Samsung Electronics 19%; Hyundai Motor 10%; SK Hynix 5%; Naver 5%; OCI 4%;Korea Zinc 4%; Kia Motors 3%; Shinhan Financial Corp (SHG) 3%; Hankook Tires 3%; and Hyundai Mobis 3%.

Citicorp today reported that it has been appointed depositary for Korea's Hanwha Chemical Co.'s GDR, which is listed in Singapore where it raised capital for some reason.